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Wise up before switching funds

In this article, we look at why it’s important to think carefully before making the decision to switch your super fund. What are your decision factors? Is the timing right for you?

Research shows that about $35 billion1 in super money is being switched every year. A high proportion (31%) of those changing funds say they didn’t receive any advice on the switch, with those switching to an industry fund getting the least advice of all.

More Australian super fund members intend to leave their super fund in the next 12 months—the latest available data1 (2018) is around 7% compared to 5% in previous years. This increasing trend is being driven by younger Australians, with 16% of those aged between 18 to 34 saying that they intend to switch. Key factors for millennials include high fees and the demand for a fund that provides a socially responsible option.1

While we’re familiar with the mantra about consolidation and saving money on multiple fees and charges, there are other important considerations to be made before switching funds.

What to think about

One of the biggest risks is not understanding that any insurance cover you have within your current super fund will become void once you are no longer a member of that fund. Researching available cover and the cost under the new fund is vital, as is a logical comparison with your current insurance cover.

You need to be sure that the investment options on offer at the new fund suit your specific needs and circumstances. How involved are you able to be in the selection of your investments? Do you want a lot of control or does the new fund have a ‘set and forget’ option that suits you?

While past performance does not guarantee future performance, long-term performance of the new fund should be critically assessed. Just because a fund performed well last year, doesn’t mean you should jump on the bandwagon. You should check for any exit or entry fees, insurance cover or tax implications before you decide to switch.

What ‘extras’ does your super fund provide? Are there any fees for general or personal advice? Are you able to manage and track your super easily online or with an app? Does it offer free seminars on retirement planning and wealth creation? How is it rated by independent research agencies? And, does the fund’s website offer tools, calculators and other resources such as online financial education?

$35 billion dollars every year is a lot of money—that’s roughly how much is switched between super funds each year. When it comes to what is basically our life savings, all Australians need to be well informed so we can make the absolute best choices for our future. Regardless of whether or not we seek professional financial advice, a solid and basic understanding of good money management, investing, insurance, retirement and wealth creation is essential to stay ahead of the pack and confidently and proactively engage with our super.

Get smart about your super with VicSuper

At VicSuper, we can help with worries or concerns about retirement. As a profit-to-member fund, we deliver great value to our members in a number of important ways:

  • As a profit-to-member fund, we keep fees as low as possible and we don’t pay commissions to financial planners.
  • Solid long-term investment returns – we aim to deliver competitive returns for our members.
  • Award-winning value – we’ve been awarded Constar’s 5-Star Rating* for Outstanding Value Superannuation in 2020, one of only six super funds across Australia to receive this rating. We’ve also received SuperRatings’ Platinum** rating – their highest rating – seven years in a row (2013-2020), confirming that VicSuper continues to be one of the “best value for money funds” in Australia.
  • High quality services – we were awarded Best Fund: Integrity by Chant West (2019)* for offering lower fees and premiums, while continuing to provide the benefits and services members really need, like quality investment and insurance, and member services and advice.

If you’re thinking about switching your super, call us on 1300 366 216.

1 Investment Trends 2018 Super Fund Member Sentiment and Communications Report
2 July 2018 we lowered the percentage component of the administration fee in our VicSuper FutureSaver product from 0.28% p.a. to 0.19% p.a. and from 0.28% to 0.22% in our VicSuper Flexible Income product

Important information

* The Canstar 5-Star Rating for Outstanding Value Superannuation was awarded in March, 2020.

** SuperRatings is an independent superannuation ratings and research company. Platinum is SuperRating’s highest rating. SuperRatings and Chant West are independent organisations. See and for ratings, criteria and methodologies.

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